When does your pension stay taxed in the Netherlands? The three pots and the three conditions

On virtually every emigration page — including on this site — stands the sentence that your pension is taxed in your new country of residence. That sentence is right by approximation. It isn't right in the details, and the details are precisely what makes the difference between a pleasant surprise and an additional assessment.

This article explains the rule properly once, so that you can apply it to every destination. What differs per country is only the filling-in — not the framework.

The framework: three pots, three rules

Your "pension" isn't one thing for tax purposes but three, and they each follow an article of their own in the tax treaty.

Pot	Who may levy	Treaty article
Government pension — built up in the service of the government	the Netherlands	usually article 19
Company pension and annuity	your country of residence — unless three conditions apply	usually article 18
AOW	differs per treaty	provision of its own, often in article 18

The article numbers are the usual ones; older treaties can deviate. Always look up the treaty with your country and read the articles yourself — they're shorter than you think.

Pot 1 — government pension stays Dutch

This is the rule that's most often remembered wrongly, and the misconception is always the same: people think it's about the pension fund. It isn't. It's about your employer.

The treaty article assigns pensions to the paying country if they were built up "in respect of services rendered to" that state or a subdivision of it. If you worked for the central government, a province, a municipality, the police, defence or public education, that's government service and that part stays taxed in the Netherlands — wherever you go to live.

Two things that go wrong there:

"I'm with the ABP, so my pension stays Dutch." Not necessarily. The ABP is the fund for government and education, but there are also participants from organisations that were privatised at some point. What counts is whether the service was rendered to the government, not which fund the contribution ended up in.

"I worked for the municipality, so everything is government pension." Not that either: it goes per employment. Whoever worked fifteen years for a municipality and twenty years for a company has two pots that are treated differently — and you have to calculate those separately too.

Most treaties moreover have an exception to the exception: if it concerns services rendered in connection with a business carried on by the state, the pension falls under the ordinary rule of article 18 after all.

Pot 2 — company pension: country of residence, unless

The main rule is simple: a company pension or an annuity is taxed in the country where you live. In most treaties it says so literally — "taxable only in that State".

But since the Tax Treaty Policy Memorandum of 2011 the Netherlands has pursued an outspoken policy of negotiating an exception to that, and in the newer treaties it's there too. The reasoning: the Netherlands gave relief on the contributions at the time, and if the country of residence then hardly taxes the payout, the balance is lost.

That conditional source-state taxation isn't an open door. In the treaty with Belgium — a good example because the mechanism is written out there — the Netherlands may only levy if all three of the following conditions apply at once:

1. The accrual was tax-facilitated in the Netherlands. The entitlement was exempt, or the contributions were deductible.
2. The country of residence taxes the payout insufficiently. Concretely: not at the normal rate for income from work, or less than 90 percent of the gross amount is brought into the levy.
3. The amount exceeds a threshold. In the Belgian treaty € 25,000 per calendar year, and that threshold only counts over the part that meets conditions 1 and 2.

That threshold exists to prevent administrative hassle with small pensions — and it differs per treaty. In some treaties it's € 15,000, in others € 20,000 or € 25,000. So never assume a figure you read for another country.

What this means in practice: if you have a modest company pension, you don't reach that threshold and you pay in your country of residence. If you have a large pension and move to a country with a favourable pension regime — Portugal and Italy have such regimes, and Greece for some years too — then condition 2 is very much in view, and the Netherlands can still levy. Precisely the situation in which people thought they were fine.

Pot 3 — the AOW stands out

The AOW is a social-security benefit and not an employer pension, and treaties therefore often treat it separately — sometimes in a paragraph of its own in article 18, sometimes with an assignment of its own to the source state.

There's no rule of thumb that's right across all treaties. So look this up per country, and don't confuse it with the question whether your AOW is paid out: that's a different matter, which belongs with the SVB and not with the tax authorities.

The step everyone forgets: the exemption statement

Suppose the treaty neatly assigns your pension to your country of residence. Then, without your intervention… nothing happens. Your pension fund simply keeps withholding Dutch wage tax, because it knows no better and may not just do otherwise.

You therefore have to apply to the Belastingdienst for an exemption from wage-tax withholding. If you get it, your fund stops withholding. If you don't apply for it, you effectively pay twice and have to reclaim the Dutch part afterwards — year after year.

Apply for it as soon as your deregistration date is fixed, not when the first payment has already been made.

The four questions for your situation

1. Which employments does my pension consist of? Split it into government service and the rest, and calculate those parts separately.
2. What does the treaty with my destination country say about article 18 — is there a source-state provision in it, and with which threshold?
3. Does my new country of residence tax the payout at the normal rate? If you're going precisely for a favourable regime, this is the question that activates condition 2.
4. Have I applied for the exemption statement for the part that doesn't stay taxed in the Netherlands?

And when you need an adviser for this

This article explains the rules; it's no tax advice, and that distinction matters more here than anywhere else on this site. If you have a mixed pension, an owner-occupied home in the Netherlands, a substantial shareholding, or are going to a country with a special regime for foreign pensioners — then the calculation is work for a tax adviser who knows both systems. What this article gives you is that you have the right conversation and bring the right papers.

See also when you need an adviser and when not and, for the payment itself, your Dutch pension abroad.

In Vertrekklaar this question is in phase 3 of your journey, with the treaty rule of your destination alongside and the exemption statement as a tickable step. See the destinations.